Justin Althoff is Microsoft’s President for the North American Market. Mr. Althoff was recently interviewed by Sterling Auty, Software Technology Analyst at JP Morgan. The interview took place on May 20, 2014, during JP Morgan’s Technology, Media & Telecom Conference. Mr. Althoff prefaced his remarks with some biographical notes: he has been at Microsoft for a little more than a year, spent 14 prior years at Oracle, and, before, at EMC. What is the significance of Mr. Althoff’s background, given his role at Microsoft?

I am asking this question for a couple of reasons:

I spent seven years in the contract consulting and executive search business, from 1994 to the end of 2001. I placed a lot of talented individuals at IBM Corp, D.E. Shaw & Co., First Rain, and Duck (now On2). So I tend to listen as individuals recount background experiences

I spent some time last week reviewing Salesforce.com’s most recent quarterly earnings webcast and took a look at the background of Salesforce’s current President and vice chairman, Mr. Keith Bloch, who, coincidentally, spent a lot of time at Oracle.

There is one other notion I have come to believe in, which is also motivating me to look further at the importance of background: this “truism” goes as follows: the same small set of people take on all of the senior responsibilities for software products targeted to specific markets (in this example, enterprise markets for productivity software). Any changes are really a matter of musical chairs. An example of this truism, at work are all of the ex Lotus sales folks, late of IBM, who somehow ended up at Microsoft selling SharePoint.

Bottom line? I’m not sold on the value implicit to following this “truism” for the businesses doing the hiring. When I consider Salesforce.com and Microsoft Dynamics CRM as direct competitors, I do not take much heart identifying the same experience set, and, in all likelihood the same methods, and style, at work for each of the President’s heading up these organizations.

But I certainly understand the importance of familiarity with a market and its participants as a metric for judging the suitability of specific candidates to head up a software business like Microsoft North America. I am merely questioning what the right depth of this “familiarity” experience ought to be, especially when the role also requires, to a significant degree, a successful track record as someone who disrupted outdated IT approaches and solutions sometime in the past.

I am not sure I know the answer to this set of questions, but I am very comfortable pointing to them as important points of consideration for ISVs doing the hiring.

Plan on at least a year and a half full time operation with zero sales if your target market is enterprise (Fortune 1000) business and you are just starting up your innovative technology product or service company. Zero sales does not mean that you proceed on your journey without sales people. On the contary, it is imperative that you have top sales talent (as well as marketing talent) on your management team if you are to give your start up its best shot. Consider how much has to be accomplished in preparation for sales revenue. For example, you will have test the sales potential for planned products to ensure that your revenue forecasts are sensible and attainable. Sales testing includes

Obtaining permission from influential prospects to participate in product planning along with you

Building a reliable sales model that includes a realistic estimate of the length of the sales cycle and, of most importance, a portrait of a best customer that will provide the bases for the qualifiers that your sales team will use to rank sales leads and determine where best to spend their time

Gathering sales level intelligence (as opposed to market level intelligence) about your competitors, their customers and the public reputation for their products

Building an initial sales funnel of qualified leads that will produce sales

As well, your sales talent will participate along with marketing and finance in the development of your business plan.

So how to compensate sales during this period of zero sales? The old adage, “you get what you pay for” holds true. Pay nothing and, more often than not, get nothing. A realistic business plan must include compensation for sales talent. Offering equity participation works, but only for sales personnel with the financial resources to weather your first year and a half period of zero sales. You might be fine restricting your recruiting to only sales people with the resources to go the distance, in exchange for an equity stake in your business and, then again, you may not.

I recommend planning on a sales staff budget of $75K – $95K for year one of your business. Of course any equity participation that you are willing to grant will sweeten the deal, so don’t neglect to include any equity that you can in your offer. Committing to a realistic sales staff budget will afford you the opportunity of hiring a sales manager (potentially a VP of sales) as a full time employee.